Glossary / Trend & momentum
Momentum
Momentum describes the speed and persistence of a security's recent price movement. As a measurement it is a short-horizon rate of change; as a factor it is the observation that recent price behaviour tends to carry some information about near-term price behaviour.
How it is measured
How is momentum measured?
Compute the return over a recent window — days to a few months — and compare it across a universe of securities, or place it on a fixed scale. Implementations differ mainly in window length and in whether the raw return is adjusted for how choppy the path was.
Why it matters
Why does momentum matter to a swing trader?
Momentum answers a different question from trend: trend describes where price has travelled over months, momentum describes how quickly it is travelling now. Swing traders track it because a multi-week holding period sits in exactly the window momentum measures. It is also the noisiest common factor — short-horizon readings reverse frequently, and a reading built on a few weeks of data is heavily exposed to single events like an earnings gap or an index-inclusion flow.
In Tapeline
Does Tapeline use momentum?
Recent momentum is one of the checks in the Tapeline score. It looks at how fast a price has moved lately, and each stock's page shows its reading.
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Related terms
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General information about market vocabulary, written to be descriptive rather than prescriptive. Not investment advice — see the risk disclosure.